The State of Waste 2015
There are more of us and we generate more waste per person, each year.
On the positive side, recycling is growing at a faster rate and since 2005 we have actually seen (for the first time) a decline in tonnages of waste sent to landfill (in the most progressive States). We now recycle approximately 52% of all the waste we generate and landfill the rest.
Across Australia governments are increasing their landfill levies (taxes paid by all companies and Councils) for waste sent to landfill. These are intended to price the unintended externalities of landfill and to provide a price signal to promote recycling over landfilling.
The effect of the levies has been to drive waste costs for most companies from 1% of operating costs towards 2-3%. Whilst these are small numbers they equate to a significant hit on EBITDA and profit.
Remote landfills are exempted from the levies in some States.
On the other hand Sydney landfill prices crossed the $300 per tonne threshold in 2012 and continue to set the trend for other States.
It is important for all waste generators to understand that the levy is avoidable. It is only paid on waste actually landfilled. In other words, if you don’t want to pay the levy, then recycle.
The landfill price rises are driving resource recovery infrastructure investment and reform.
For most States the levies are now a significant revenue source. In NSW, the landfill levy raises more than $500 million per year.
To its credit, the NSW government has used these funds to establish a $465.7 million 4 year infrastructure and recycling grants program. These funds are granted to private companies and Councils (up to $5 and $10 million respectively) for new or improved recycling infrastructure.
Victoria, SA and WA all have similar schemes though at a lesser scale. Tasmania is exploring a $10/t levy. QLD had a levy for 2 years but it was dropped in 2012. The effect was a 20% decline in recycling rates, the loss of jobs and the transportation of waste from NSW to QLD.
The NSW levy combined with the grant funding, is seeding a renaissance in the development of new recycling infrastructure and job creation. In fact, recycling is probably one of the only manufacturing sectors showing real growth and increased employment in NSW.
Recycling jobs are largely recession proof. Recycling rates do not generally swing as high or as low as the broader economy and much less than sectors such as mining, tourism and construction. Recycling jobs are mostly blue/green collar jobs. Recycling is a prime source of new jobs creation. For every 2.8 jobs in landfill we create 9.2 jobs in recycling. The sector employs over 30,000 people now and is worth over $11 billion per year.
Given the job creation potential of recycling, why does landfill continue to be the de facto method of waste disposal for 50% of what we generate?
First and foremost – cost. Landfill is cheap. Many, especially local government owned landfills have been inherited from past generations and don’t include the cost of replacement, rehabilitation and gas management in their pricing. State governments are coming to the realisation that this needs to be remedied and this will push up landfill pricing via reform and true cost pricing.
Commercial waste remains a key challenge with recycling rates in this sector averaging just 40% or lower. The reason – business owners are economically rational. They recycle materials that are economically viable (cardboard/paper and metals, which have inherent commodity value) and landfill the rest.
Business owners must weigh the additional costs of labour to sort materials for recycling against the costs of landfill. Cheaper landfill equals lower recycling rates and vice versa.
One important innovation will be the introduction of weight based charging for commercial skip bins. These are the front lift 3m3 bins with lids behind most pubs, offices, restaurants etc. At present most front lift bins are charged by volume not by weight. So a business can pay as much for a bin with one piece of polystyrene in it, as another with half a tonne of rubble.
New weighing systems now permit legal trade based on weight. Weight based charging will provide a direct price signal to business managers and will be the biggest single reform in the commercial waste sector for decades.
The next big innovation will be “Commercial dirty MRF’s” (Materials Recovery Facilities) to recover recyclables from mixed business waste. The rise in landfill levies, combined with new Government infrastructure grants, is now making large scale recovery plants commercially viable.
The commercial sector is now also funding Extended Producer Responsibility (EPR) schemes for the collection of televisions and computers, oil and tyres. New EPR schemes are in development for paint, batteries, smoke alarms and gas bottles to name a few.
Energy from Waste (EfW)
EfW will transform waste management in Australia. Rising landfill costs, new State policies and financial grants, are accelerating the move to EfW as an alternative to landfill. Best practice EfW includes gasification, pyrolysis, plasma arc and incineration and variations on these technologies. Already we have proposals for 3 EfW plants in Perth, one is operating in SA and at least another 2 are proposed for Sydney.
NSW, Vic and WA have given the green light to EfW via new policies. These generally have 3 preconditions: EfW must not cannibalise recycling; plants must meet high air emission standards; and they must be bona fide energy generators (not just waste disposal).
Another piece of the waste puzzle is the construction sector, which generates 40% of Australia’s total waste. This sector has the highest recovery rates at approximately 60-80%, because the waste materials are more homogenous (timber, metal, concrete), are heavy and therefore costly to landfill (and responsive to levies), and can be sold in large volumes back into robust construction markets. New Building Council star rating systems are also being introduced for building refurbishment and demolition.
In the household sector, key reforms include the implementation of a third “green” bin for household garden and food waste and new 360 litre recycling bins for those households who need more volume (about 17% of households fill their recycling bin to capacity each fortnight).
Almost 25% of all recyclables are placed in the wrong bin by householders and this typically goes to landfill. Improving education will have some effect on this “loss”.
Many councils are also contracting AWT (Alternative Waste Technologies) to sort through the garbage bin – to recover recyclables and convert the organic component into low grade compost. These will continue to grow.
Some minor streams including mattresses, polystyrene and batteries can now also be recycled, as a result of support by Government and the participation of charitable organisations.
Role of Government
The role of government (particularly State Government) is to clearly articulate where on the “recovery spectrum” they intend to sit (low cost landfill and lower recycling rates; and vice versa) and then to develop the appropriate policies, regulations and funding arrangements to make it happen.
Most businesses want to do the right thing but they are also economically rational. They will recycle to the extent limited by cost and return.
MRA has worked with businesses and governments across Australia to create realistic waste strategies.
In our experience most businesses and households support higher recycling rates and somewhat higher landfill levies, but only where a significant amount of the levy revenue is hypothecated to recycling infrastructure and systems.
As one Councilor put it to me “No-one likes paying taxes but better they be progressive taxes than not. Better that we tax pollution and improve recycling, than tax payrolls and increase unemployment.”
With that sentiment in mind, rising landfill costs and improved recycling rates driven by new infrastructure, services and more recycling jobs, are with us for the long term.
Article originally published by The Fifth Estate